Tepco targets 3.1 trillion yen in cost cuts spanning 10 years

[TOKYO] Japanese utility company Tokyo Electric Power (Tepco) said on Monday (Jan 26) that it would cut about 3.1 trillion yen (S$25.6 billion) in costs spanning 10 years through restructuring measures.

It added that it expected to swing to a loss for the fiscal year ending in March.

The government has approved the Japanese firm’s revised business plan, which calls for raising about 200 billion yen for the next three years by selling assets.

It also intends to pursue alliances to advance its intended reforms, saying it will seek partners capable of growing with it.

Tepco is the operator of the Fukushima Daiichi nuclear power plant, which in 2011 suffered one of the world’s worst nuclear disasters.

It faces mounting costs related to decommissioning the plant, cleaning up surrounding areas and paying compensation. The company is borrowing government funds to cover costs related to the disaster.

Potential asset sales include equity stakes and real estate holdings. The Nikkei newspaper has reported that it could sell shares in Kandenko, an electrical and plant equipment company, 46 per cent of which is owned by Tepco.

It declined to comment on specific assets.

To meet growing demand for the construction of data centres in Tokyo, the company said it would step up development by collaborating with firms focused on securing suitable sites, as well as manufacturers and construction companies.

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On Monday, it said it expected a loss of 641 billion yen for the FY ending in March, compared with a year-earlier profit of 161.2 billion yen.

The company attributed its expected shortfall to a one-time loss related to the Fukushima Daiichi disaster.

Tepco shares closed down 3.8 per cent in Tokyo, and the overall Nikkei index ended the day 1.8 per cent lower.

The firm is targeting recurring profit of 342 billion yen in FY2034, up from 135 billion yen in FY2024.

That assumes the No 6 reactor at the Kashiwazaki-Kariwa nuclear power station will restart in FY2025, and the No 7 unit in FY2029.

It stopped the No 6 reactor on Thursday to investigate a malfunction, after restarting it briefly earlier in the week. That was Tepco’s first restart of a nuclear power plant since the Fukushima disaster.

Tepco revises its business plan every few years, a process that requires government approval. The latest plan is the first revision in more than four years.

Tepco reduced its costs by 8 trillion yen and raised 1.1 trillion yen with asset sales from FY2012 to FY2024. REUTERS